Dan Morain: Donors' millions kept undercover

Americans for Job Security, a political operation with a name that is a cross between pabulum and platitude, did what it was set up to do: help a rich man hide his multimillion-dollar donation to a campaign.

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Americans for Job Security, a political operation with a name that is a cross between pabulum and platitude, did what it was set up to do: help a rich man hide his multimillion-dollar donation to a campaign.

The money wasn't the $11 million that Americans for Job Security helped funnel into California in the final weeks of the 2012 campaign.

In this instance, a wealthy Alaska businessman named Robert Gillam used Americans for Job Security to cloak the bulk of the $2 million he spent on his failed 2008 ballot measure to block a proposed mining operation. The mine promises to secure U.S. jobs, but also might despoil the fishery at Bristol Bay where Gillam owns a private fishing lodge.

"AJS is nothing more than a sham entity created for the sole purpose of allowing people like Gillam to evade campaign disclosure laws. AJS has no purpose other than to cover various money trails all over the country."

Americans for Job Security operates from an office in Arlington, Va., and has one employee, a Republican operative who didn't bother to call me back.

If Washington were functional, Americans for Job Security might be brought to heel for abusing its tax-exempt status with its heavy involvement in election politics. But the Internal Revenue Service faces a congressional inquisition into its apparent targeting of conservative-oriented nonprofits, and the Federal Election Commission is bogged down by partisanship.

Given that sorry combination, Americans for Job Security and others of its ilk will operate freely again in 2014, raising untold millions from wealthy donors who seek to sway elections while remaining in the shadows.

Except that state regulators are stepping in where feds have failed. New York Attorney General Eric Schneiderman is pushing broad disclosure requirements for nonprofit corporations that engage in electioneering in New York state races.

The California Fair Political Practices Commission, led by chairwoman Ann Ravel, is sponsoring far-reaching legislation that would impose similar disclosure requirements on nonprofits involved in California campaigns.

"Either there has to be federal involvement, or the states need to band together," Ravel said as she sat at her desk, every inch of which was covered by piles of papers of pending FPPC matters.

The FPPC-sponsored Assembly Bill 914 by Assemblyman Rich Gordon, D-Menlo Park, would require that nonprofits that spend $50,000 or more on California state campaigns disclose the identities of donors who give $10,000 or more.

The disclosures would be made once a year, when the nonprofits file their public tax returns. Voters would learn identities of donors after the elections. That's not ideal, although it's probably what the law, as it now stands, would allow. At least the information would become known. As it is, nonprofits are under no obligation to identify their contributors.

"This is groundbreaking. It has never been done anywhere," Ravel said.

The source remains unknown of the $11 million that was dumped in California on Oct. 16.

What is known is that donors gave $11 million to Americans for Job Security, which transferred it to a second nonprofit shell called the Center to Protect Patient Rights in Arizona, which transferred it to a third nonprofit shell, Americans for Responsible Leadership, also in Arizona, which gave it to Small Business Action Committee, a political action committee controlled by Joel Fox.

Fox, former head of the Howard Jarvis Taxpayers Association, spent the money in an unsuccessful attempt to defeat Jerry Brown's tax initiative, Proposition 30, and pass Proposition 32, which sought to restrict labor's ability to raise and spend campaign money.

Ravel, a Brown appointee, called it money laundering. The FPPC sued to compel disclosure and opened a civil investigation.

Gary Winuk, head of the FPPC's enforcement unit, planned to wrap up the investigation by June, through that could be delayed while state Attorney General Kamala Harris conducts a separate inquiry.

Given that past often is prologue, perhaps the Alaska investigation will foreshadow what California authorities find.

Acting on a complaint by developers of the proposed gold, copper and molybdenum mine in Alaska, the Alaska Public Offices Commission followed the money:

Gillam gave $1 million to Americans for Job Security on one day in 2008. On the next day, Americans for Job Security flipped $750,000 to Alaskans for Clean Water, which campaigned for Gillam's ballot measure. Three weeks later, Gillam gave $500,000 to Americans for Job Security. Two days later, Americans for Job Security gave $450,000 to Alaskans for Clean Water.

"The only time Americans for Job Security made a contribution to Alaskans for Clean Water was immediately after receiving an even larger contribution from Gillam," the Alaska investigators found.

The Alaska commission settled the case against Gillam and two campaign entities for a $100,000 payment; they admitted no wrongdoing. Americans for Job Security settled for $20,000, plus a solemn promise that it will never ever do it again, sort of.

"The foregoing does not apply to any other jurisdiction that may have laws dissimilar to the state of Alaska," Americans for Job Security's deal says, implying that it would proceed on its merry way in other states.

Indeed, Americans for Job Security has campaigned in no fewer than 45 states and has spent no less than $70 million in recent years.

In 2008, Federal Election Commission investigators urged that the commission find that Americans for Job Security violated federal election law by failing to register as a political committee in U.S. Senate races, and not disclosing its donors.

However, with the commission evenly split between Republicans and Democrats, Republicans blocked the inquiry, allowing Americans for Job Security to skate.

The Internal Revenue Service could investigate whether Americans for Job Security abuses its nonprofit status by getting so heavily involved in politics. But if revenuers ever did contemplate such an inquiry, they crippled themselves with recent revelations that they singled out nonprofit groups with names that sounded conservative.

Federal regulators are stuck in the partisan quagmire, at the same time that federal courts are making it clear that wealthy donors can give unlimited sums to secretive nonprofits, leaving voters in the dark about who pays for much of federal elections.

As the feds blunder, aggressive state regulators are stepping forward to shed light on dark money donated to and spent by political operations that hide behind their nonprofit status.

About This Blog

Dan Morain has been a columnist for The Sacramento Bee since 2010, focusing on state government and politics. He previously worked for The Los Angeles Times, covering the California Supreme Court when Rose Bird was chief justice, the Legislature when Willie Brown was speaker and the governor's office during Gray Davis' tenure. Dan Morain can be reached at dmorain@sacbee.com or 916-321-1907. Twitter: @DanielMorain.